In the figure above, suppose the original budget line is BD. A rise in the price of a compact disc will
A) rotate the budget line to AD.
B) rotate the budget line to CD.
C) not move the budget line.
D) result in a parallel leftward shift of the budget line.
A
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Sammy has a drone that he values at $1,500. Dean values the same drone at $2,000. Sammy decides to sell the drone to Dean for $1,800. If the government imposes a $350 tax on the sale of drones,
A) Sammy and Dean would not be able to complete the transaction. B) Sammy and Dean would still be able to complete the transaction. C) the tax would cause a deadweight loss of $500. D) Both A and C are correct.
The "law of demand" states that, other thing remaining the same, the higher
A) the price of a good, the lower is the demand for this good. B) consumers' incomes, the greater is the demand. C) the price of a good, the higher is the quantity demanded. D) the price of a good, the smaller is the quantity demanded.